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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 01-25-2012, 10:28 PM
ddol1 ddol1 is offline
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Default one time RRSP withdrawals - declared NOT as income for one time withdrawals

Hi everyone - sorry to ask - I just can't find the rule and it is not clicking for me today - I just can't find it.

One time RRSP withdrawals - declared NOT as income for one time withdrawals as long as the money is not used for well things that normally get paid with regular income. In my case I took out 7,000 to cover lawyer's fees. I asked the CRA and was given the letter from the CRA to have the bank release the funds without holding the normal taxes (10 - maybe 15% for this amount I believe?)

What I need to find tonight is: Where is the rule or document that states that we can declare a one time withdrawal of RRSP as not income (in my case I brought it up with my lawyer and his response was, "It will not be too bad averaged out over the year" ?????? I admit I was at the end of my rope and I said no - declare it as non income and I really got the impression he had no clue on this? He is making my support application tomorrow so yes, this will be a huge difference for me as it would actually almost double my income amount when it doesn't need to.

thanks for your help
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Old 01-25-2012, 10:50 PM
Cobourg Cobourg is offline
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ddol1
If you can show that this was really a "one time" event, you should have no issue.
I had no issue in my case. Smaller amount and smaller overall percentage of income, but it was not included.

Look at this case.....there are many others on CanLii. Just do a search

Betz v. Joyce, 2009 BCSC 1199 (CanLII) section 88
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Old 01-25-2012, 11:01 PM
beebie beebie is offline
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It is a one time increase in income and non recurring...might be fed child support guidelines or just rev Canada Sources of Income for Line 150 to source the principle in law but not considered income. Might be a dissipation of mat property though unless other spouse got same amount.
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Old 01-25-2012, 11:06 PM
ddol1 ddol1 is offline
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I did try to look through the document - admit tonight I do not have the capacity to read very well (generally i do but I must pick my best days - or go so slow that it can take "all night to get through one document..... it has been this way for a while now (it is super frustrating but I can't change what I am able to do on any given day)..... If I missunderstood what section 88 (this was the paragraph number was it not?) this case did seem to be concentrated on parenting and a move from Vancouver to the US somewhere (I got that much!!) - I did I miss something?
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Old 01-25-2012, 11:08 PM
ddol1 ddol1 is offline
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beebie - will not be disssipation because the funds are taken out after valuation date. The amount in the rrsp has been "declared" so removing some now will not change that number.
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Old 01-25-2012, 11:47 PM
beebie beebie is offline
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Right...don't think it is a rule so much as common sense and matter of case law as previous poster suggested.
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Old 01-26-2012, 12:42 AM
ddol1 ddol1 is offline
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I am actually going nuts tonight.......I went far over board and common sense seams to be the answer. I looked so hard and got nowhere - so frustrating when I know I have read or come across it so many times - even like about a week ago! It really threw me for a loop when the lawyer didn't just say no problem...... I was already in or at a point that the meeting was not working, I know the numbers but they are not in the format that fits into the standard 13.1 and this came up.... it was the last bit - I had nothing left.

I am going to email him and hope for the best - mybe for the interm support it will not make that big of a deal??? Either way the money is gone and it was last year in a way - can't use it to pay for food and rent this year.

thanks for the words of wisdom - starting to settle down a bit so you had at least for tonight "words of magic!" all the best.
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Old 01-26-2012, 09:52 AM
first timer first timer is offline
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Hope this helps:

Family Law Act

ONTARIO REGULATION 391/97

CHILD SUPPORT GUIDELINES

Income

Pattern of income
17. (1) If the court is of the opinion that the determination of a parent’s or spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the parent’s or spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. O. Reg. 446/01, s. 5.

Family Law Act - O. Reg. 391/97


Some of the most common types of non-recurring income that courts deal with are:

1. RRSP Redemption. Even though RRSP redemptions are included in your income for tax purposes, a one-off RRSP redemption normally would not be considered part of your income for child support or spousal support purposes. However, if you had a pattern of cashing in a certain amount of RRSPs each year, the results might be different.

2. Stock Options. The law about including stock options in income is less clear. If you exercise stock options on a regular basis, the chances are that they will be included in your income. However, if you exercise stock options only once, and this is not part of your normal pattern of income, there are leading cases that say this should be included in income and also that say this should not be included in income. If you have a significant amount of one-off income from stock options, get a good family law lawyer and be prepared to roll the dice.

3. Severance Packages. These are normally included in income for support purposes, even if you find a job right away and so have an unusually high income in the year the severance package was paid.

4. Personal Injury Awards. Generally, if the damages you receive in a personal injury award are for pain and suffering, this does not need to be included in your income for purposes of calculating support. If the damages you receive are for loss of income, these generally do get included in income for support purposes. If you’re negotiating an out of court settlement of your personal injury suit, you can guess how you want the settlement to read.

5. Capital Gains. The treatment of this type of income is all over the map, but generally one-off capital gains are considered income for purposes of calculating support. On the other hand, generally one-off capital losses are not used to reduce income for purposes of calculating support. The most usual case where capital gains will not be included in income is where the gains are immediately re-invested. For instance, if you sell a business, and re-invest the proceeds into a new business, then generally the capital gains from the sale of your business won’t be considered as part of your income for purposes of calculating child support and spousal support.

Non-Recurring Income-- Ottawa Divorce Blog
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